Google transformed Mountain View, is San Jose next?

1of5A dilapidated fence and advertising signage are seen near San Jose’s Diridon Station, in an area where Google expansion could bring 20,000 more jobs.Photo: Jessica Christian / The Chronicle

2of5New construction is seen across the Diridon Station tracks near a fence adjacent to the SAP Center parking lot in San Jose, Calif. Friday, Jan. 4, 2019.Photo: Jessica Christian / The Chronicle

3of5New housing developments hug either side of the tracks leading from San Jose Diridon Train Station in San Jose, Calif. Friday, Jan. 4, 2019.Photo: Jessica Christian / The Chronicle

4of5The exterior of the historic San Jose Diridon Train Station in San Jose, Calif. Friday, Jan. 4, 2019.Photo: Jessica Christian / The Chronicle

5of5A commuter who wished not to be named waits for Caltrain on the platform at San Jose Diridon Train Station building in San Jose, Calif. Friday, Jan. 4, 2019.Photo: Jessica Christian / The Chronicle

For decades, canneries around San Jose’s Diridon Station processed the fruits of the fertile “Valley of Heart’s Delight,” now known as Silicon Valley. Opened in 1935, what was then called Cahill Depot was a rail depot for the Southern Pacific Railroad.

The canneries were demolished, as fruit orchards faded away and were replaced by low-slung tech offices. Parking lots now dot quiet streets on the western edge of downtown.

Transportation could once again usher in San Jose’s future, this time in partnership with a 21st century corporate giant. Google, Silicon Valley’s biggest tech tenant, wants to build a mammoth campus in the area over the next two decades, coinciding with the BART extension to Diridon Station planned for 2026 and future high-speed rail. The station already has Amtrak, Caltrain and light rail.

With 6 million to 8 million square feet of commercial space planned, 20,000 employees from Google and other companies could work in the area. That would boost downtown San Jose’s job base of 43,000 by almost 50 percent, according to city data. Google could become the city’s largest private employer, surpassing Cisco Systems’ 9,800 current workers.

Transportation officials in Santa Clara County expect the number of riders going through San Jose’s historic Diridon Station each day will rise from 17,600 in 2016 to 140,000 in 2040.

Photo: Jessica Christian / The Chronicle

Diridon Station plans will differ from many existing tech campuses that are isolated from the public and steer workers to private cafeterias, shops and gyms. Google plans to include housing, parks and shops open to everyone — though neighbors fear the company’s arrival will push them out.

Google has positioned the expansion as having broad community benefits.

“We’ve heard first and foremost that we need to prioritize housing at varying levels of affordability, and we’re committed to doing so,” said Mark Golan, Google vice president of real estate, at a City Council hearing last month.

San Jose Mayor Sam Liccardo supports the expansion. He said Google will bring “a tech corporate campus that’s not built with guarded walls and a moat with alligators with it, but actually a campus that’s integrated with a public urban village.”

Liccardo said it would also help reverse decades of suburban sprawl, fueled by congested highways that slice through downtown San Jose.

Diridon Station’s ridership is expected to grow eightfold — from 17,600 daily passengers in 2016 to 140,000 passengers in 2040 — according to the Santa Clara Valley Transportation Authority.

“San Jose, of course, sprawled during the age of the automobile. Our development pattern was really something resembling a doughnut” — growing outskirts and an overlooked downtown, Liccardo said. “This is an opportunity for us to really retrofit a city really built for the automobile for a city built for people.”

Flight traffic from Mineta San Jose International Airport has capped building heights to around a dozen stories. Liccardo said the city plans to propose height increases this month.

Google is not seeking tax subsidies for the expansion and plans to pay for unspecified community benefits around affordable housing, homeless aid, education and job training. That compares favorably with other tech deals, said Liccardo, citing Amazon expansions that call for billions of dollars in public subsidies from New York and Virginia.

A poll last year by the Silicon Valley Leadership Group, a business-backed nonprofit whose members include Google, found that 68 percent of likely voters support the expansion.

But critics fear Google will make San Jose, which already has some of the highest housing costs in the country, more of a place that only the rich can afford.

A maintenance worker sweeps up around Templo La Hermosa church across the street from the Diridon Train Station in San Jose, Calif. Friday, Jan. 4, 2019.

Photo: Jessica Christian / The Chronicle

About 50 local activists have organized against the project. “The impacts will negatively affect our neighborhood,” said Liz Gonzalez, 38, a lifelong San Jose resident who works near Diridon Station. “A tech company’s only going to drive up prices.”

She would rather see no tech offices and a community-driven land trust plan with parks and affordable housing.

Despite the opposition, the council voted unanimously to sell public land to Google for $110 million, citing the long-term boost of millions of dollars in expected tax benefits.

Liccardo says the housing crisis goes beyond Google. In 2017, he called for 25,000 new homes by 2022 — before the first new Google office is expected to open.

Within the Diridon Station area, about 5,000 housing units could be built, a city study found. The city has a goal of 25 percent affordable housing there.

Aggressive land annexation has made San Jose the Bay Area’s largest and most populated city, sprawling across 180 square miles. It’s the 10th largest by population in the United States, with more than 1 million residents.

Despite being the headquarters to a number of household tech names, including PayPal, eBay and Adobe, it’s more of a bedroom community than a jobs center, city officials say.

More than 60 percent of employed residents leave San Jose for smaller jobs-rich cities like Mountain View and Palo Alto, worsening commutes and depriving San Jose of tax revenue.

A couple look for their platform while carrying luggage through San Jose Diridon Train Station in San Jose, Calif. Friday, Jan. 4, 2019.

Photo: Jessica Christian / The Chronicle

The region’s three largest tech companies — Apple, Facebook and Google — have headquarters elsewhere. And the next crop of major employers — including Twitter, Uber and Airbnb — chose San Francisco for their headquarters.

“It’s a different generation of tech companies. They want to be in an exciting, urban place. San Jose hasn’t gotten there yet,” said Terry Christensen, professor emeritus of political science at San Jose State University. “The population here has really been focused on work and family.”

No new office buildings are under construction downtown because asking rents aren’t high enough to justify the cost of construction, said Erik Hallgrimson, a broker with Cushman and Wakefield. That in turn limits job growth.

Final approval of Google’s expansion isn’t expected until 2021 at the earliest, and the next two years will be a marathon of public hearings, City Council votes, environmental studies — and continued opposition.

Martha Nieves, a lifelong San Jose resident, lives in Cinnabar Commons, an affordable housing complex two blocks away from the Google site. She makes $15.75 per hour at Hope Services working with autistic children.

As a single mom raising two kids, the city’s high living costs are already a challenge. She fears Google’s arrival will make it even harder.

“I do not want to move to the east side. I’m going to try my best to stay,” she said. “I feel that a lot of people are scared.”

Nieves thinks Google has been too vague about its community benefits plans and thinks future jobs will largely benefit people who don’t currently live in San Jose.

Golan, the Google executive leading the project, said at last month’s public hearing that the company chose to get community feedback before proposing a project. He said the company has held over 30 meetings with neighbors and will continue to talk with them. (A Google spokeswoman did not make Golan available for comment, referring instead to his past public comments.)

Nieves hopes to see more commitment to blue-collar jobs and a large amount of affordable housing. “I think there’s an agreement we can all come to,” she said. “There’s always a middle ground for everything.”

Other critics have said San Jose’s talks with Google have been too secretive, and two nonprofits sued the city in November claiming the city entered into illegal nondisclosure agreements. City officials have said the nondisclosure agreements are typical when land deals are being discussed, and they no longer apply.

Liccardo said that rejecting Google would be the wrong choice, because the company would expand instead in neighboring cities. That would still increase housing demand in San Jose and deny the city any fiscal upside, he said.

Roland Li covers commercial real estate for the business desk, focusing on the Bay Area office and retail sectors.

He was previously a reporter at San Francisco Business Times, where he won one award from the California News Publishers Association and three from the National Association of Real Estate Editors.

He is the author of “Good Luck Have Fun: The Rise of eSports," a 2016 book on the history of the competitive video game industry. Before moving to the Bay Area in 2015, he studied and worked in New York. He freelanced for the Wall Street Journal, the New York Times and other local publications. His hobbies include swimming and urban photography.